This year correlations among equities have moved significantly lower and as a result, we believe active managers are better positioned to beat their benchmarks.
Growth investing has produced persistent and robust outperformance relative to value investing during the past decade. We believe the economic developments that have supported this style divergence may continue to bolster growth over value.
Despite perceptions that investor confidence may be too high, the U.S. market now lacks the exuberance that traditionally accompanies a market top. U.S. equities have typically experienced very large increases during the final years before their peaks and it does not appear that today’s market has reached that threshold.
Identifying equity peaks and valleys has traditionally confounded scores of investors eager to position their portfolios based on their market outlooks. Many investors are now watching for a market decline to create a “buying opportunity” but history suggests that the current bull run may still have legs.
The monetary stimulus and fiscal austerity of recent years appear to be undergoing role reversals. As quantitative easing (QE) decelerates and fiscal stimulus accelerates around the world, investors should reconsider their asset allocations.
Among areas of the economy experiencing intense change, certain industries with high price-to-earnings (P/E) ratios have outperformed, a result of strong innovation and vibrant earnings growth. Rather than focus on P/Es, investors should assess earnings growth potential and the consequences of innovation.
Hedged equity may be appealing now that the Fed has raised rates and is expected to continue doing so. As higher interest rates can also hurt the performance of bonds, investors might consider shifting assets from fixed income to hedged equity.
Innovation is happening at an exponential pace and is changing industries faster than ever before. This has profound implications for where investors are likely to find potential opportunities.
The output gap is a powerful tool that currently indicates the U.S. economy has potential for expansion, which could support equities in the foreseeable future.
ESG investments have strong potential for mitigating risk by providing earnings stability. Highly rated ESG companies may not only benefit society—they may benefit your portfolio too.
The volume of U.S. regulations is at a historical high. Thus, the potential for Washington to initiate reforms that can reduce regulation and help lower costs for U.S. businesses is also high. This has benefits for many companies, small or large, and for equity investors.
Valuations for larger cap growth stocks may give pause to some investors, but history suggests that current price-to-earnings ratios indicate the asset class remains attractive.
Annual spending on healthcare comprises an ever larger portion of U.S. GDP. Innovation in healthcare science and technology can curtail these increases by reducing costs and increasing the efficiency and quality of care, thus benefiting patients and investors.
In the U.S., a broad geographic range of home price appreciation may drive improved consumer spending — and the economy.
This earnings season, Wall Street analysts expect S&P 500 EPS growth up 12% year-over-year in 1Q17, marking the longest period of earnings acceleration in over five years as well as the highest growth rate. The trend remains positive for several reasons.
The most innovative companies grow their sales—and their stock prices—faster.
A historically wide disparity exists between equity and bond valuations, setting the stage for three potential scenarios. Under any of these scenarios, we believe, equities would outperform.
Historically, an inverted yield curve has been viewed as a strong indicator of a potential economic recession. Based on this signal, it appears that a recession is unlikely to happen anytime soon.
One of the largest transfers of wealth—an estimated $30 trillion over the next few decades—will occur as Baby Boomers pass money to younger generations. What do you think the younger generations value?
The percentage of active-fund assets outperforming the S&P 500 moves in cycles with outperformance recently hitting a trough. There are reasons to expect improvement.
Recent low correlations of non-U.S. stocks to the S&P 500 Index add to the attractiveness of the developed foreign market and emerging market categories.
Everyone knows that saving for retirement is critical. However, many people may not be aware that a higher credit score can be an important component of an investment strategy and a sizable contributor to a nest egg.
Solid economic data and hopes for fiscal stimulus have led to soaring optimism. As a result, valuation disparities may exist within equities, providing investment opportunities.
Job openings are at their highest level in more than 16 years and outpacing new hires. A strong labor market is the underpinning of a solid economy—and may lead to incremental investment opportunities.
“Wide-moat” companies have strong competitive advantages including the power to maintain large profit margins. A key attribute of wide moat companies is their focus on innovation.
Many view the Dow hitting 20,000 as a symbolic or psychological breakthrough. However, after two years of stagnation, S&P 500 earnings have now passed a more meaningful milestone. Because we believe earnings drive the market, an earnings per share breakout should support stock price records.
Growth, synergy, scale and diversification are among the reasons why many large companies engage in mergers and acquisitions. Smaller companies are frequently their targets.
A recent survey among small businesses points to a surge in confidence following the recent U.S. presidential election. This could continue well into 2017 due to expectations for lower taxes and less regulation brought forth by the new administration.
As U.S. equities continue to hover at all-time highs, investors are continuing to buy. Yet, some stocks have more room to move up than others—specifically the growth stock category, whose premium to value stocks is currently near its lowest level in almost four decades.
Some investors view stock market highs with excitement, others with trepidation. When stocks are higher, many wonder what to do. However, if you have a long-term time horizon, you can put your money to work as the odds of losing money decrease over time.
The underperforming Healthcare sector is likely poised for a turnaround. The last time the sector’s valuation discount to the market was this wide, it outperformed the S&P 500 by over 700 basis points annually over the subsequent five years.
Some proposals by the new administration and House of Representatives Republicans lower corporate tax rates, making U.S. tax rates more in line with global peers. How can you benefit as much as possible from the potential change?
90% of stock market returns over a 10-year period is attributable to
starting price-to-earnings (P/E) ratios. Buying low and selling high in
terms of P/E has historically driven returns.
recently, the acute search for yield had driven more and more money
into fixed income. However, expectations around fiscal stimulus owing to
the U.S. election drove up growth and inflation expectations which seem
to have resulted in a Great Rotation from bonds to equities.
Price-to-earnings ratios for the traditional growth sectors—Technology,
Health Care, and Consumer Discretionary—are currently discounted
materially relative to defensive sectors such as Utilities, Consumer Staples, and Real Estate.